EUR/USD: Draghi, Low Volatility, & Calm Market Behind ‘Outsized’


Draghi sent the euro up. And then some ECB sources downplayed Draghi. What’s next? Here is the view from BTMU:

Here is their view, courtesy of eFXnews:

BTMU FX Strategy Research notes that the most common question fielded yesterday was whether the comments from ECB President Draghi were consistent with a 1.2% surge in EUR/USD.

“Yesterday we chose to highlight the fact that our equally- weighted G10 FX volatility index had dropped by more than one standard deviation from the average going back to 1999 and perhaps yesterday’s sharp move was more a reflection of positioning with market participants caught out,” BTMU argues.

“Low volatility and calm market conditions breathes complacency and can result in out-sized moves relative to the fundamental explanation behind the move. 

However, looking through the comments we would also acknowledge that there was certainly a greater emphasis on highlighting the positives in contrast to the ECB monetary policy press conference when perhaps the focus was more on playing down the progress in order to diminish any exaggerated move,” BTMU adds.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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